ATLANTA (Reuters) - Major retailers, led by discounters Wal-Mart and Target, turned in better-than-expected August sales on Thursday, as consumers went back-to-school shopping despite higher gasoline prices and the nation’s housing meltdown.
Customers at a Wal-Mart in Chicago, September 27, 2006. Wal-Mart on Thursday reported a higher-than-expected 3.1 percent rise in August sales at its U.S. stores open at least a year. REUTERS/Joshua Lott
Tracking firm Retail Metrics said 64 percent of retailers beat expectations for the month, aided by strength in luxury goods and teen apparel. The back-to-school season is the second-biggest retail shopping period behind Christmas.
Retail leader Wal-Mart Stores Inc WMT.N posted a 3.1 percent rise in August sales at stores open at least a year as it cut prices on 16,000 school products to entice shoppers. Analysts were expecting its U.S. sales to rise just 1.6 percent, according to Reuters Estimates.
Target Corp TGT.N said same-store sales rose 6.1 percent and value chain Family Dollar Stores Inc FDO.N raised its quarterly profit forecast.
Others with stronger-than-expected results included apparel retailers AnnTaylor Stores Corp ANN.N, Gap Inc GPS.N and J.C. Penney Co Inc JCP.N, which on Wednesday reported a lower sales decline than analysts had expected.
MACY’S IMPROVES
Even Macy's Inc M.N, which has struggled with disappointing results at former May Department Stores it acquired in 2005, topped expectations with a 2.4 percent sales gain, aided by promotions and improvement in home goods.
The Standard & Poor's Retail Index .RLX edged up 0.22 percent in late afternoon trading.
But some analysts cautioned that the better-than-expected August results from most retailers were not an indication that spending would be robust going into the holiday season.
Consumers face many pressures, as weakness in the U.S. housing and credit markets grips the wider economy and higher food and gasoline prices draw more of shoppers’ discretionary income.
“August is not a great proxy for the consumer,” said Todd Slater, managing director and retail analyst with Lazard Capital Markets. “I think the consumer will continue to be cautious and put pressure on the retail numbers for some time.”
Britt Beemer, chairman of America’s Research Group, which surveys consumer behavior, noted that store traffic rose in August because of “super aggressive” promotions ahead of the Labor Day holiday.
“The question is how strong will September be after Labor Day weekend?” Beemer added.
TEENS ARE SPENDING
Teen retailers had solid results, as shoppers scooped up jeans and other trendy clothing to wear back to school.
Abercrombie & Fitch Co ANF.N said August same-store sales rose 6 percent, while American Eagle Outfitters Inc AEO.N logged a 9 percent gain. Pacific Sunwear of California IncPSUN.O racked up a 9.6 percent increase.
“Later back-to-school starts in Texas and Florida have given a lot of retailers a nice boost, coupled with tax-free events that got pushed out of July into August this year,” Ken Perkins, president of Retail Metrics, said.
The luxury sector continued its strong run as Saks Inc SKS.N reported a same-store sales jump of 18.2 percent on demand for designer clothing and shoes -- double the 9.1 percent increase expected by analysts. Nordstrom Inc's JWN.N August comparable-store sales gained 6.6 percent.
“Saks is really the shining star,” said Faith Hope Consolo, retail leasing and sales chairman at Prudential Elliman Retail Leasing. “In the past year, Saks has renovated, become very promotional minded and reached out for the consumer.”
A notable disappointment was Kohl's Corp KSS.N, which posted a 0.6 percent decline in same-store sales compared with a rise of 3 percent expected by analysts. Shares of Kohl's, which cited "some softness" in the U.S. Southern and Southwest regions, were off more than 1 percent.
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